Premier & Potter Printing Press Co. v. Fuller, 294 F. 451

Premier & Potter Printing Press Co. v. Fuller

294 F. 451 | 2d Cir. | 1923

MAYER, Circuit Judge

(after stating the facts as above). [1] It is contended by Premier Company that the instrument was a conditional sales agreement, which created a lien in its favor under the Personal Property Raw of the state of New York (Consol. Laws, c. 41) and that such lien was unaffected by the subsequent execution of the chattel mortgage. New York Personal Property Law, § 62; Hewit v. Berlin Machine Works, 194 U. S. 296, 24 Sup. Ct. 690, 48 L. Ed. 986. The trustee relies upon Nordone v. Austin Drainage Excavator Co., 184 App. Div. 309, 171 N. Y. Supp. 725, as authority for the prop - osition that the chattel mortgage upon its delivery to the vendor superseded the conditional sales agreement, and that the parties then had the legal status of mortgagor and mortgagee, which continued up to the time of bankruptcy.

It is, of course, elementary that in a conditional sales agreement the title remains in the vendor, while in the case of a valid chattel mortgage the title is in the mortgagor, here the vendee. In the case at bar, the chattel mortgage necessarily recognized this relationship in the following definite language:

“This mortgage is a purchase-money mortgage and is given to secure the balance of the purchase price of the chattels conveyed, hereunder.”

It is manifestly inconsistent that title shall remain in the vendor, and also that the purchaser shall execute and deliver a chattel mortgage. In accordance with a familiar principle, contracts should he *454construed in Such manner as to harmonize their provisions, if possible. While we think the two clauses, quoted supra, are inaptly drawn, we are of the opinion that they can be reconciled. It will be observed that the notes were to be secured by a chattel mortgage or instrument; whichever the vendor elected to submit to the purchaser, and that the purchaser agreed to execute and deliver such chattel mortgage or instrument “on or before the date of the erection of the machinery ready for power connection.” Another part of the agreement provided: “Said notes shall be dated the day of the erection of the machinery ready for power connection.” Thus the notes and the chattel mortgage were to be contemporaneous, and were to be executed at a date subsequent to July 9, 1921, the date of the order on the printed form addressed to Premier Company and signed by Richardson Company.

As appears from the agreement supra, the purchaser paid a certain amount of cash on signing the agreement, and it was to pay further cash on the erection of the machinery ready for power connection, and to give notes secured by a chattel mortgage on or before the daté of such erection. It might very well be that there would be delay or disputes in respect of the time when the machinery was erected “ready for power connection,” and for that or some other reason, good or bad, that the purchaser might not execute the notes and the chattel mortgage, at the time contemplated in the agreement. It was but natural that the vendor should protect itself by reserving title until such time as the chattel mortgage was executed and delivered. Without such a reservation clause, the order or agreement might have been construed as an absolute sale from Premier Company to Richardson Company.

When, however, the chattel mortgage was executed and delivered, the relations of the parties changed. There was no longer something to do in the future, but there was an executed transaction, whereby, in point of fact, Premier Company conveyed the title of the property to Richardson Company, and Premier Company by accepting this mortgage, clearly recognized that it was a purchase-money mortgage, given to secure the balance of the chattels conveyed thereunder. Thus Sie parties by their own conduct and their practical construction of the agreement fixed their status.

It is urged that the Nordone Case is different from that at bar because, in that case, the agreement contained a proviso noted in 184 App. Div. at page 312, 171 N. Y. Supp. 727, as follows:

“Provided, however, that the failure of the first party to request such chattel mortgage, or of the second party to execute the same, shall not effect the reservation of title in first party unless and until such mortgage shall be executed.”

We are unable to see any merit in this rather fine distinction as applied to the case at bar. After reviewing the facts, Mr. Justice Thomas, in the Nordone Case, said:

“The vendor did elect to take the chattel mortgage during the time the machine was under demonstration, so that such security was effective at the time the machine was accepted, and thereupon, from very necessity the stipulation for the conditional sale and for action in case of default was discard-*455oil and without function. Tlie chattel mortgage declared that the plaintiff had sold the machine to the defendant and that it should become void upon payment of the notes, and in case of default authorized the defendant to retake the property and to sell it, and from the proceeds to pay the sum secured and charges, and it was the intention that the overplus should be rendered to the plaintiff.”

The facts in the case at bar are as strong as, and, if anything, stronger in favor of the trustee here than they were in favor of the successful litigant in the Nordone Case.

Warren v. Lair, 190 App. Div. 139, 179 N. Y. Supp. 632, affirmed without opinion 232 N. Y. 626, 134 N. E. 599, was decided by a divided court. In that case the jury returned a special verdict in favor of plaintiff, and the trial court then decided that the transaction was a conditional sale. The majority of the Appellate Division held that plaintiff was entitled to recover as a matter of law, while the minority were of opinion that the judgment was against the law and the facts. We are not enlightened as to the ground upon which the New York Court of Appeals based its decision. The facts are different from those in the case at bar, because the chattel mortgage was executed simultaneously. The court found, in effect, that in point of fact the vendee was not the owner of the truck, and that the representation in such regard in the chattel mortgage set forth a legal conclusion only.

In the case at bar, it is clear that the intent of the parties was that the purchaser should become the owner of the property at the time when the chattel mortgage was later to he executed, and we are not now confronted, as was the court in Warren v. Lair, with the difficulty of construing inconsistent contemporaneous acts.

[2] We conclude, therefore, that the chattel mortgage was valid when executed. Appellant, however, unreasonably delayed in filing the chattel mortgage, as required by the New York statute, and under attack by the trustee the chattel mortgage must he held void, because of the unreasonable delay in filing it. Bankruptcy Act, § 67 (Comp. St. § 9651); In re Schmidt, 181 Red. 73, 104 C. C. A. 107; Skilton v. Codington, 185 N. Y. 80, 77 N. E. 790, 113 Am. St. Rep. 885. In the absence of proof of the date of delivery of the chattel mortgage, the presumption is that it was delivered the day of its date. Purdy v. Coar, 109 N. Y. 448, 17 N. E. 352, 4 Am. St. Rep. 491.

Order affirmed, with costs.